Jakarta market loses ground on regional slide

JAKARTA (JP): The rupiah weakened to 13,200 against the U.S. dollar yesterday and stock prices dropped 1.3 percent on regional weaknesses, dealers and stockbrokers said.

Currency dealers said the rupiah was hovering above the 13,000 level in quiet trading as investors saw no fresh incentives in the market after Indonesia's donors pledged US$7.9 billion in aid to the country last week.

They said bearish sentiment in the regional market also weighed down the rupiah, sending the currency to a day low of 13,400 to the dollar.

Dealers said the huge aid commitment pledged by the Consultative Group on Indonesia (CGI) helped prevent the rupiah from slumping further against the American dollar.

"Unlike other regional currencies, the rupiah was not that affected by the Japanese fall," a chief dealer with a local private bank said.

The rupiah ended yesterday's trading at 13,150/13,250 to the dollar, weaker than its Friday close at 13,000.

Dealers said the Japanese yen, which fell past the 145.5 level to the dollar, sent a negative sentiment to all currencies in the region.

"Although the rupiah was affected by the Japanese fall, its impact was small thanks to the CGI commitment," the chief dealer said.

Dealers said news that the Armed Forces (ABRI) would investigate former president Soeharto's son-in-law, Lt. Gen. Prabowo Subianto, in connection with the kidnapping of political activists would improve sentiment over the rupiah.

"Investors have often raised the question whether ABRI will be committed to investigating high-level officers involved in the abduction of the country's activists," a dealer with another local private bank said.

Although ABRI has taken some positive measures, concern over the country's social and security problems remain unresolved, he said.

"This is still a big question for investors," the dealer said.

The bearish sentiment also infiltrated the Jakarta Stock Exchange (JSX), which saw its main price index fall 1.3 percent.

Speculative

The JSX Composite Index closed 6.54 points down to 475.25 on a total turnover of 131.93 million shares changing hands on the regular market valued at Rp 153.91 billion ($11.65 million).

Stockbrokers and analysts attributed the fall to profit taking by speculative investors.

"Trading activities were quiet yesterday because the market did not expect any more positive news in the local bourse," Antonio Yongnata, an analyst at Mashill Jaya Securities, said.

He said most investors, who made gains prior to the conclusion of the CGI commitment last week, put in large selling orders to take profits yesterday.

The head of research at Sigma Batara Securities, Fadjar Limin Sutandi, said the local bourse would remain sluggish until the government imposed clear-cut measures to restore the country's social and political climate.

"We don't expect any capital inflow from offshore funds if the social and political climate does not improve first," he said.

Most large-cap stocks closed lower yesterday. Heavyweight state-owned local telecommunications firm PT Telkom was unchanged at Rp 4,350, while state-owned international call operator PT Indosat was down Rp 225 to close at Rp 14,350.

Cigarette giant PT Gudang Garam fell Rp 100 to Rp 8,800, while competitor PT HM Sampoerna also dropped Rp 225 to Rp 3,175. (aly)